Can these 7 skills make you a better Bitcoin trader? | Bitvo

Are you thinking about being a crypto trader?

Or, if you’re a maximalist, how to trade Bitcoin?

Maybe you are wondering if traders are born or made.

The good news is that traders can be made

Trading in any asset, including crypto, requires the development of various skills. Some of those skills include managing risk, developing trading plans, and evaluating your results.

Other skills are less concrete. These are the soft skills.

These skills don’t come with a certificate, recognition, or accolades.

They don’t come with a nice digital manual or a PDF.

The skills a crypto trader requires come from ongoing experience and development. They will come as a byproduct of working on your trading process. Not paper trading, but doing trades with real money on the line.

And these soft skills are essential for creating your future success as a trader.

Trading Bitcoin using 7 soft skills

Employers place a premium on soft skills at work-things like communication, leadership, teamwork, critical thinking, and work ethic.

For the trader, the skills are different.

In the trading arena, there are 7 soft skills you can develop, including:

These 7 skills will enhance your outcomes as a trader, and over time, they will become a competitive advantage.

Let’s have a look at each one.

Pattern recognition for crypto trading

You’ve got pattern recognition programmed into you. You’re born with it. It’s part of your survival mechanism.

You can use different analytical approaches to assist your trading. The two most common types of analysis are: fundamental and technical.

As a crypto trader, technical analysis will be your primary focus, which requires pattern recognition.

Chart patterns work on a sort of confirmation bias. The more people believe the pattern, the more likely it will work. But conditions change.

Watching the behaviour of Bitcoin or Ether isn’t enough. You will have to recognize patterns and then add interpretation.

Is this a pattern that everyone else sees?

Or is it a pattern that can be exploited in the opposite direction?

Will larger players use it to fake out smaller, less experienced traders?

Patterns work until they don’t. Backtesting and curve fitting can show you what worked yesterday. It might not work today.

Pattern recognition is like a treasure map. You just have to make sure you understand what all the signals on the map mean.

Trading Bitcoin requires discernment

Discernment is defined as the ability to comprehend the obscure. In another context, it refers to keen insight and judgment.

Learning to develop sound judgment can help you in many ways as a crypto trader.

It can help you decide if you be short Bitcoin or trade with leverage. It will help you answer the question of whether that 100x Bitcoin position a good idea.

With good judgment and keen insight you can navigate the white noise of anonymous opinions and promotional activities.

As a trader, your ability to evaluate the validity of what you see and hear is critical. It will help you tune out the many other distractions that you will be subjected to.

All those blog posts, articles, videos, and forum posts have a purpose. They are designed to influence, persuade, and shape your view of the world.

Nothing is as great as they say it is, nor is it ever as bad. But it’s up to you to figure out which is which.

Discernment is about being yourself and owning your actions and outcomes.

In a world of endless distractions and charismatic charlatans, discernment is a superpower.

Yes, it’s OK to be skeptical

Being a skeptic has received a bad rap in recent years. It’s often used as a negative characterization of someone’s opinion.

But being skeptical and questioning the things you see and hear is an advantage for a trader.

Remember, it’s your money on the line. It’s your emotions that you have to deal with. And those emotions are based on the outcome of your decisions and actions.

That means being skeptical of the motivation of people providing tips. All that “special” “free” information often has a motive. They most likely have underlying incentives you are unaware of.

All anonymous advice has a price. You just don’t know what it will cost yet.

A crypto network has a built-in trust mechanism for the verification of a transaction. But it doesn’t help you with the decisions that influence the transaction in the first place.

In a world inundated with opinions, content, and “facts,” skepticism can be your secret weapon.

Bitcoin is adaptable. Are you?

Markets are fluid and ever-changing. What worked yesterday or last week is arbitraged out, and a new strategy emerges. And as the market changes, you must be prepared to adjust your thinking and strategy.

Consistency is a challenge for all of us. It’s hard to change your position after taking a stand. And that inability to change or adapt can be an expensive limitation.

The need to be right is one of the most expensive needs in any market. That need represents a lack of adaptability.

It’s OK to be bearish as a Bitcoin trader. Remember, Bitcoin doesn’t know you own it. Neither do the members in the network. So when it’s time to lighten up, do so.

If your analysis tells you the market is going to weaken short term., it’s OK to sell some and reposition.

Having conviction is important, but if the goal is profitability, “being right” isn’t relevant.

Adaptability is the difference between a long term market player and shattered dreams.

Being a crypto trader is like therapy

When you are dealing with profits and losses, internal emotions become amplified.

Trading will show you in painful clarity every weakness you have inside. You will be forced to face the ones you don’t want to see, and those you may not realize are there.

Everything you believe about money and wealth, both positive and negative, will be magnified through your feelings and actions.

This is OK and part of the trading development process.

The secret is being able to see your feelings as information. Your mission is to understand the source and the trigger and how you respond.

Your trading journal will help you with your self-evaluation by identifying triggers and reactions.

It helps you understand your response to market conditions and results. It provides information about who you are and what your senses are telling you as you trade.

Trading crypto or any other asset will bring your demons to the surface. And if you want to stay in the game, self-evaluation isn’t an optional skill.

Many will struggle with this, but you can harness this information and use it to your advantage.

Crypto uses blocks. You can use compartmentalization

Compartmentalization means the ability to separate events or situations in ways that alter your perception of them.

In a trading setting, it could be “playing with the house’s money.”

This is where you push your advantage using your capital gains as a confidence booster.

The house’s money is the gain. Your money is the principal. With no principal on the line, your emotional state is free and clear. Confidence is heightened.

By categorizing the gain objectively (the house’s money), it relieves you of the psychological pressure to sell before you should. After all, your money (the principal) isn’t at risk. So you have nothing to lose by pushing the envelope — with appropriate risk management stop losses in place, of course.

Compartmentalization allows you to step outside your relationship with the money and see it as less internal and emotional.

Remember, Bitcoin doesn’t know you own it. Neither does Ether. This applies to every asset on the planet, physical or digital.

Think about how that one realization can alleviate you of the emotional burden of ownership. And how it can enhance your decision-making.

Use discipline as a cryptocurrency trader

Discipline is a forgotten word in modern language and thinking.

Discipline implies a set of rules and principles followed to achieve an outcome. It’s the things you do when no one else is looking.

Crypto traders are developing these rules and principles with experience in the market. They are exercising discipline by using a trading plan. Discipline also means following the trading rules and principles you set out for yourself. It means using a well planned out risk management approach.

Discipline means you don’t add to a losing position after you violated your stop loss.

It means executing your planned stop loss based on a drawdown of a certain percent.

Or the minute you feel giddy about your gains, you go and sell a bit…

It means completing your trading journal for each trading session, review, and adjust each and every day.

Being disciplined has another advantage. It keeps you focused and rational when market conditions are in flux and chaotic.

Bitcoin traders are enhanced by soft skills

Trading is an expression of life but accelerated to extremes. All the skills you learn as a bitcoin trader or trading crypto will have broad applicability beyond the market.

Discipline, discernment, and adaptability are widely revered skills.

Skepticism, compartmentalization, and self-evaluation are deeply personal skills.

Pattern recognition is a part of your nature as a human being.

Together, these soft skills help to provide your trading foundation. They are a competitive advantage over time.

They will help you become the trader you want to be.

______________________________

Canadians can buy Bitcoin, Ether, and QCAD on Bitvo’s secure, fast, and easy to use cryptocurrency trading platform.

Originally published at https://bitvo.com on October 20, 2020.